Wednesday, November 02, 2011

More Evidence of Tidal Flows in the US Stock Markets

Boom. Bust. Financial markets are being held hostage by politics and subjected to monetary tidal flows which can be seen in increasing correlations of price actions of US stocks.

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Evidence from Bespoke,

We consider all or nothing days in the market to be days where the net daily A/D reading in the S&P 500 exceeds plus or minus 400. With today's current net A/D reading of -460, there have now been 55 all or nothing days for the S&P 500 in 2011. At this rate, 2011 is now on pace to see 66 all or nothing days, which is well above the prior high of 52 back in 2008.

In the 66 trading days since the start of August, more than half (35) have now been all or nothing days. As we noted last week, the number of occurrences that we have seen in the last three months eclipses the total number of all or nothing days that we saw from 1990 through 2001 (34).

Again because of the politicized nature of the financial markets, price actions can go extremely volatile either way.

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It would signify a reckless assumption that the prevailing risk environment can be traded short term.

The highly fluid turn of events that brings about an aura of heightened uncertainty appears to enhance the risks of rapid deterioration of events which could be vented on the marketplace beyond anyone’s expectations.

This should apply to the Philippine markets as well.

Where the extreme gyrations of the financial markets reflect on casino like odds, I’d rather play cards.

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